The National Housing Law Project appreciates this opportunity to contribute to this committee's consideration of changes to the public housing and certificate and voucher programs. The views we present in this statement reflect the work of the Project over the past twenty-nine years, since its creation in 1968. During that time we have served as a support center for lawyers and other housing advocates around the country who have been representing people with low incomes on housing and community development matters. The support we provide them includes legal research, advice regarding litigation, participation in litigation, legislative and administrative advocacy, publication of our Housing Law Bulletin and our housing law manuals, and training. The matters have involved everything from routine evictions and rent disputes to major class actions enforcing the federal housing laws.
It is from our experience working with local attorneys and housing advocates who are dealing with the day to day problems that arise from the implementation of the federal housing laws that we have developed the views we express today. They are guided by a view that the federal housing laws should be designed to protect the interests of people with low incomes who cannot secure a decent place to live without housing assistance.
The statement covers ten general issues: (1) Targeting, i.e., who should receive federal housing assistance; (2) The limit on additional public housing; (3) Tenant participation; (4) Board membership-, (5) Rents, i.e., how much can poor people afford to pay for federally assisted housing; (6) The operating subsidy commitment; (7) Demolitions, dispositions and conversions to vouchers; (8) Use restrictions, mortgages and mixed-finance projects; (9) Eviction notices; (10) The work requirement and (7) The certificate and voucher merger.
Because not enough housing assistance is appropriated to serve all who need it, one of the most significant housing policy issues over the years has been who should get what little assistance is made available. Debate over this issue has become even more crucial now, for several reasons. First, the private market has ceased to provide any housing, much less decent, affordable housing to the poorest people in this country. As HUD's reports on people with the worst case housing needs have indicated, a record and growing number of people - 5.3 million households in 1993 - pay more than half of their incomes for rent or live in severely substandard housing or both. HUD, Rental Housing Assistance at a Crossroads: A Report to Congress on the Worst Case Housing Needs (March 1996). Second, Congress is no longer providing assistance for incremental units, i.e., for housing assistance that would serve additional low income families, and, in fact, is shrinking the amount of assistance available through attrition. Third, because of the changes in the welfare program, millions of welfare families will be desperately in need of a stable, affordable home to live in permanently while they make their transition from welfare to work.
At least since 1990, strident arguments have been made that too much of the assistance is being directed to poor people and not enough to moderate income people. S.462 responds to those arguments, but in doing goes further than is necessary or wise, in several respects. For public housing the bill would apparently require that not than 40% of the families that a PHA admits each year be families whose incomes do not exceed 30 percent of the area median incomes. Not less than 75 percent would have to be families whose incomes do not exceed 60 percent of the area median. For Section 8 rental assistance the comparable figures would be 50 percent with incomes beneath 30 percent and the remaining 50 percent could have incomes up to 80 percent of the area median. Section 113.
Profile Targeting This targeting provision is significantly better than the targeting provision in H.R. 2, which, for public housing, focuses upon all of a PHA's occupied units, instead of the units rented to new tenants each year (1) . Compare S. 462, Section 113 with H.R. 2, Section 222(c). In contrast, Section 113 of S. 462 focuses upon the families admitted to public housing each year. The goal of profile targeting is to have 60 percent of public housing occupied by families with incomes above 30 percent of the median. The defect in profile targeting is that until that goal is reached, no applicant with an income beneath 30 percent of the area median would have to be admitted to public housing. Every welfare recipient, minimum wage worker, and person making $1 or $2 above minimum wage would stay on the waiting list for years while the PHA admitted applicants with incomes above 30 percent of median, skipping over the poorer applicants who would wait for what would seem like forever. The time it would take to meet the goal has been estimated to be at least 5 years and possibly as much as 17 years. The targeting provision would be completely ineffective during all of that time. It would have no impact whatsoever on any admissions decisions until the goal is achieved.
Whatever the merits of profile targeting were last year, this year, now that welfare reform has been enacted, it makes no sense at all to exclude applicants on welfare from public housing now. People making the transition from welfare to work need decent, affordable and stable homes to succeed. If welfare reform is to succeed, people on welfare will need access to a fair share of the public housing and certificates and vouchers that come on the market each year. With their housing problems solved, they can concentrate on getting and keeping a job. Without it, being forced to spend exorbitant portions of their meager incomes on rent on the private market, and having to double up and move from place to place to avoid eviction for nonpayment will de-stabilize their lives and defeat their efforts to stay employed. It would be grossly unjust to deprive people who are trying to make the transition to work of the housing assistance they need to secure a stable home.
Skipping For another reason, relying on 30 percent of the area median as the only means for ensuring poor people a share of public and assisted housing will not be effective in most metropolitan areas. One can easily understand why if one looks at the actual dollar figures that constitute 30 percent of the area median income in many areas. In virtually all the Metropolitan Statistical Areas, 30% of area median income is well above the income level of minimum wage workers or welfare recipients (2). That is true., even if the current statutory authority to adjust the figures down in areas with unusually high incomes is retained. In Oakland, San Jose, Boulder, Denver, Bridgeport, Hartford, New Haven, Wilmington, Washington,Chicago, Minneapolis-St. Paul, Boston, Newark, Trenton, and Seattle, for example, 30% of median income would exceed $16,000 (3). In contrast, welfare grants are beneath the $7500 per year level in the states with the highest grant levels, and full time work at $5.00 per hour only works out to only $10,400 per year.
If all a PHA has to do is rent 40 percent of its units or provide 50 percent of its vouchers to applicants with incomes beneath $16,000 a year, minimum wage workers or welfare recipients would not be ensured access to public housing or vouchers in these cities or in most of the MSAs at anytime. The PHAs could meet their 40% and 50 percent shares required by the bill by renting to persons earning more than the minimum wage, without accepting any applicants with minimum wage jobs or welfare income. To make the targeting provision work for such applicants, it would have to be amended to include a provision barring the PHAs from skipping over applicants in the 0-30% range to take applicants in that range who have higher incomes.
Higher Targets. Looking at the actual figures that constitute 30 percent of the median incomes in most areas of the country also leads to the conclusion that more than 40 percent of the rented units should be set-aside for people at these income levels. The range from 0 to 30 percent of area median leaves room to include many applicants who are working and even many who have incomes above the minimum wage. Substantially more of the units rented can be for applicants in this range without undermining efforts to increase the number of employed people living in public housing. For example, for the tenant-based program, the bill should target 75 percent of the admissions to people with incomes beneath 30 percent of the area median and 100 percent beneath 50 percent of the median. Even in public housing, if 50 percent of the applicants admitted had incomes beneath 30 percent of median, many of them would be working people with incomes well above minimum wage, and all of the other half could have even higher incomes. In no way would all of that 50 Tercent of the applicants admitted have to be welfare recipients.
Project-Based Section 8. The rewriting of Section 16 will also have a possibly unintended consequence for the Section 8 project-based programs. Under Section 16 as it is now, project-based Section 8 landlords are not allowed to skip over poor applicants in order to take people with higher incomes who have applied later. Nor are PHAs allowed to skip over poor applicants for the certificate and voucher programs. The bill would repeal that provision and allow Section 8 project-based landlords to always select the applicant with the higher income, leaving poor people on the waiting list forever. Repeal of Section 16 would also leave project-based Section 8 landlords with no obligation to rent any of their units to applicants with incomes beneath 50 percent of the median income. Those consequences of the repeal of Section 16 should be corrected.
Preferences. The bill would also repeal Section 6(c)(4)(A) which establishes the federal and local preference requirements for public housing. Section 107(b). That provision requires that one half of the units rented each year would go to federal preference holders and that the PHA could establish its own local preferences in accordance with local needs for the other half of the units, after a public hearing. The bill not only would repeal that statute, but it would replace it only with a requirement that the PHA's plan include its preferences, if any. Section 106. That section includes no criteria for acceptable preferences at all. See Section 5A(d)(3), p. 22. Until that plan is approved by HUD, the bill would allow the PHA to establish any local preferences for public housing or Section 8 that it would like. Section 107(h). p. 38.
At a minimum, the statute should require that any preferences be consistent with meeting the needs of people residing in the community and of people on the waiting list identified in the plan. The preferences should also be required to be consistent with the local consolidated plan.
Set-Asides for Welfare Recipients. The bill also contains a provision which would require PHAs to seek cooperation agreements with welfare departments in order to bring self-sufficiency services into housing sites. Greater cooperation between housing providers and the welfare departments will be vital to the effort to enable welfare recipients to move to work. It is important to remember, however, that housing authorities have something to contribute to this effort as well, i.e., public housing and housing assistance. PHAs will be more likely to secure assistance from the welfare departments for their tenants if they also have something to offer the welfare departments for the other welfare recipients. It would be better if the bill were amended to require the PHAs to also offer to help the welfare departments by making public housing and tenant-based assistance to applicants who are receiving welfare. Targeting some housing assistance to welfare recipients wfll pay off in the long run.
The final provision related to admissions is the one that would repeal the current law that requires PHAs to promptly notify rejected applicants of the reasons for their rejection and to provide them with a hearing on those reasons. See Section 107(b) which would repeal Section 6(c)(3) of the Housing Act. That principle of fairness should also be retained in the statute. -
Most of the preceding discussion on targeting would be irrelevant, if Congress were making enough funds available for public and assisted housing to meet the needs of all eligible people. This bill, however, not only fails to authorize such an amount of funds, but also bars PHAs from using their capital fund to build additional public housing that would increase the number of public housing units owned by the PHA above the number owned when the bill is enacted. See new Section 9(e)(2). Given the extreme shortage of affordable housing that poor people in this country face, that limitation is hard to justify. It certainly is unjustified in situations where there is a need for public housing and there is a well-managed PHA capable of developing and managing additional units. Ironically, under the bill as now drafted, only PHAs that have to demolish projects that they have allowed to deteriorate will be allowed to build new public housing. PHAs which have don.-, well and have no units to demolish or sell will not be able to build any new public housing.
The exception provided by the bill does not solve the problem. It would allow PHAs to use capital ftinds for new construction, but would not increase the operating subsidies available to the PHA to cover those units, nor would it make modernization funds available for those units in the future. A PHA which used its capital funds under this exception would have to rent those units only to moderate income people who could pay rents that would cover all operating costs and a reserve for future modernization. That would be an unjustified use of scarce federal public housing funds.
Over the past 25 years, the Congress and HUD have repeatedly recognized the importance of tenants' being involved in the operation and governance of their homes. There is nothing startling about that. The experience throughout this country is that small towns, neighborhoods, residential subdivisions, and condominiums and co-operatives work best when the people who are living there take an active part in deciding what happens to their homes. Thus it is crucial that these revisions to the housing act contain provisions that will ensure the tenants an effective voice in the operation of their developments.
Effective tenant participation will be even more important under S. 462, because it eliminates many of the statutory restrictions on PHAs' powers that have protected the tenants' interests and replaces them with PHA discretion to make policy choices. If this devolution is going to work, it is vital that the tenants be at the table and be listened to, when the PHA makes the decisions that are delegated to them. Only if their voices are heard will tenants be able to protect their interests that will no longer be protected by federal law.
In many places, S. 462 does recognize the importance of resident participation. It provides for one public housing resident to be on the board. Section 102. It authorizes funding for resident councils and resident management corporations for certain activities. Section 121. With regard to the public housing plan, it requires the establishment of a resident advisory board with which the PHA must consult in developing the plan.
Nonetheless, the bill could be significantly improved if two steps were taken. First at each important step in the operation of a public housing development that affects tenants, a tenant participation requirement should be written into the statute. Second, the tenant participation requirements themselves should be much more aggressive about guaranteeing tenants an effective role in the process.
Points For Participation. There are additional steps where tenant participation is essential and the statute should specifically guarantee the tenants a voice. For example, whenever a PHA decides to spend capital funds to modernize or renovate a building, it should be obliged to bring the tenants and their organization into the process of deciding what improvements to make. Currently, Section 14(d)&(e) of the Housing Act requires that applications for modernization assistance be developed in consultation with the tenants, but that section is repealed by this bill. Except for the role of the resident advisory board in the development of the PHA's annual plan, there is no requirement that plans for use of the capital fund be developed in consultation with the tenants.
Limiting tenant participation regarding modernization to the annual plan is not wise, because that planning process includes too many other items for the tenants to focus upon and does not reach the level of detail regarding modernization for the tenant's participation to be effective. There should be a separate requirement for tenant participation in the use of capital funds, especially for modernization.
Here are some additional examples. The bill would authorize PHAs to establish ceiling and flat rents. The statute should ensure the tenants an opportunity to present their views on what those rents should be and the PHA should be obliged to consider those views. Whenever a PHA revises the lease, it should be obliged to negotiate with the tenants in good faith regarding the terms of the lease. If the PHA develops a plan to voucher out a development under the new Section 22, it should be obliged to allow the affected tenants participate in the development of that plan, as the bill would require. If the PHA decides to demolish or sell a project, again it should be obliged to allow the tenants to participate in the making of that decision. When the PHA decides to adopt local preferences for admission, both the current tenants and applicants on the waiting list who will be affected should be granted the opportunity to present their views and have them considered.
Current law requires tenant participation at certain of these points, especially on modernization and demolition or sales. The bill, however, would repeal the sections of current law that include those tenant participation requirements. See Sections 14 and 18 of the U.S. Housing Act. The current version of S. 642 does not re-enact tenant participation requirements for those actions. It should.
Required Elements. At each point when tenant participation is required, the statute should include provisions that will make the opportunity to participate real and the participation effective. Those provisions would include requirements that tenants:
The provisions on tenant participation already in S. 462 need to be strengthened along these lines to make them effective.
The role granted the resident advisory board with respect to the public housing plan is good, but by itself it will not ensure effective tenant participation on many crucial issues. The plan covers many topics, and thus lessens the depth of the tenant's involvement on any particular issue. On some issues, for example, demolition, modernization or conversion plans for a particular development, the interest of the board members will not be as intense as the interest of the residents of the actual development. On issues which require in depth participation by the families directly affected, the involvement of the resident advisory board in developing the annual plan will not be sufficient.
Technical Assistance Funding. Another key ingredient to successful tenant participation is access to technical assistance in evaluating the PHA's proposals and the options that might be pursued. That is true whether the issue is vouchering out, planning modernization, setting rents, adopting admissions preferences or many of the other significant decisions affecting public housing. Under the bill, the tenants most reliable source of funds to purchase such technical assistance would be the new Section 33, added by Section 121 of the bill. However, as drafted the permissible activities that can be funded under the program onlyinclude resident management and economic self-sufficiency activities. Section 33(b). The bill should be expanded to indicate that tenant participation activities at any of the junctures required or authorized by the act are permissible activities that can be funded under this new section.
The bill, at Section 102, would require the Board of each PHA to have at least one public housing resident as a member. Assuring membership of residents on the board of commissioners will improve the success of public housing. Nonetheless, representation by one public housing resident on a local housing authority's board is not sufficient to ensure that the tenants views are heard. There should be at least two resident members, so that no one will have to serve on a board as a lone tenant. In addition, resident board member representation must be based on a percentage of total board membership. Otherwise resident representation could be diluted by expanding the total number of board members. For boards over 5 members, at least 40 percent of the members should be residents.
For public housing, the bill would modify the Brooke Amendment by allowing the PHA to set flat rents for units and charge the tenant the flat rent, as long as it would be less than 30% of the tenant's adjusted income. Section 103. That provision provides the best of both worlds. It eliminates the disincentives to work that use of the 30 percent rule as a floor creates and it still guarantees that tenants not be charged an unaffordable rent for public housing. In addition, it avoids the unnecessary administrative complexity of the "choice" system that H.R. 2 would create.
There is one part of this Section 103 that could be better drafted. The provision on ceiling rents, Section 103(b) would grant the PHA authority to establish ceiling rents and charge them "notwithstanding paragraph (1)". Paragraph (1) is the provision which limits tenant's rents to no more than 30 percent of their adjusted incomes. If a ceiling rent could be charged "notwithstanding" the 30 percent cap, the cap would not work to keep public housing affordable to poor people.
Tenants With Earned Income. The bill includes another very important protection tenants who are making the transition from welfare to work. That is Section 104(b) on earned income disallowances. That provision would protect people who go to work after having been unemployed for 1 year or more from rent increasesfor 18 months. It would also phase in the increase after the 18 months over a three year period. That deferral of rent increases is desirable, because it allows the newly employed family to get settled for a period before they have to deal with increased rents.
In the bill's definition of adjusted income, there are two points at which the protections for employed tenants could be improved. First, the definition would allow elderly families, but not working families to deduct excessive medical expenses. See new section 3(b)(%)(C). In this time when many public and assisted housing tenants will be moving from welfare to work, one of their greatest difficulties will be dealing with medical expenses for their families. Those who do incur excessive medical expenses should not be denied the adjustment to income that mitigates the effects of those costs now for elderly tenants. Such an adjustment existed up until 1981 and should be restored.
Second, the permissive exclusions of some earned income, which the bill would authorize at the new Section 3(b)(5)(E), added by Section 104, will not remove the disincentives to work if the PHA chooses not to exercise those options. Mandatory deductions for work-related expenses that ensure that the tenants rents will not exceed 30 percent of their take-home pay are needed. When employed tenants' rents are based upon gross income, they can end up paying higher rents than welfare recipients with incomes equal to the employed tenants' take home pay. Under Section 3(b)(5)((E), a PHA could create additional adjustments to exclude withholding items such as FICA and income taxes, but it would not be required to do so. To ensure fair treatment for all employed public housing tenants, PHAs should be required to follow adjustments to earned income prescribed by the statute, or at least by HUD.
Minimum Rent. For both public housing and choice-based assistance, S. 462 also authorizes a minimum rent up to $25, at the PHA's option. Sections 103(b). This provision is better them H.R. 2, because the highest minimum rent would be $25, not $50, and the PHA would have the option of not charging a minimum rent. Nonetheless, it must be remembered that minimum rents affect only the poorest of the poor in America. Only public housing tenants with adjusted incomes below $83 a month are affected by a $25 minimum. All other tenants pay at least $25 under the 30 percent-of-adjusted-income test. Those with adjusted incomes below $83 are people living in states with the very lowest welfare grants, people who have been disqualified from SSI or welfare, such as lawful immigrants, people who never qualified for AFDC because they have no children, and people who are caught temporarily without income during the transition from earned income to welfare, SSI or unemployment compensation. The minimum rent provision should be deleted from the bill.
Welfare Sanctions. Section 1 1 0 of the bill would prohibit a PHA from reducing the rent or increasing the assistance of a family if its welfare income is reduced as a sanction for not meeting the welfare department's self-sufficiency requirements or because of welfare fraud. The adversely affected family is granted a right of review through the PHA's grievance procedure. The PHA is required to enter into cooperation agreements with the welfare departments for sharing information with that department and for securing services for public and Section 8 housing tenants. New Section 12(d).
The provision barring reduction of rent for tenants who have committed welfare fraud has already been enacted as part of the welfare reform bill. See Pub. L. No. 104-193, 911, 110 Stat. 2353 (1996). The ban against rent reductions when people's welfare is reduced as a sanction, even if there has been no fraud, is new. It was specifically excluded from last year's welfare reform bill, for good reason. The welfare bill authorizes grant reductions. in the absence of fraud, in cases, for example, where the kids do not stay in school or the parent does not pursue a GED. Reducing the welfare grant is a severe sanction for the family, because it will have less money to pay for those necessities of life that are covered by the other 70 percent of their income. Denying them the rent reduction to 30 percent of their new, lowered income, will almost surely lead to their eviction. Once evicted from public or assisted housing they will soon become homeless and their children will be taken away. In that situation, the chance that they will ever become self-sufficient will be just about nil. Regardless what one might think about humanitarianism, taking those people's homes away from them will frustrate, not further the long-term goals of the welfare reform statute. As a result the part of this section unrelated to welfare fraud should be eliminated.
If it is retained, the right to review mentioned in the statute should be strengthened and clarified, in two important respects. First, in the grievance process, the affected family must be guaranteed access to all the relevant documents upon which the welfare department made its determination and the PHA is seeking to act. Second, in the grievance proceeding the issue to be decided should be not merely whether the welfare department imposed a sanction, which will be uncontested in most cases, but whether the tenant failed to do something required by the welfare self-sufficiency program. Otherwise, mistaken imposition of sanctions wfll never be corrected in the grievance process. Third, the burden of going forward and of persuasion in the grievance hearing should be upon the PHA.
In order to keep rents affordable for the tenants and maintain public housing in good condition, PHAs will have to receive operating subsidies that close the gap between what the tenants can pay and the costs of operations. Current law recognizes that fact of life, when it requires HUD to embody the provisions regarding operating subsidies in a contract guaranteeing their payment, subject to the availability of funds. Section 9(a)(1)(A). Although that guarantee is conditioned upon Congress appropriating sufficient funds, it reflects a Congressional commitment that operating subsidies should be calculated to cover the costs of a well-run PHA that are not covered by tenants rents.
The operating fund provisions in the bill have no similar commitment. See Section 109, rewriting Section 9. The bill would require HUD to establish the operating fund. But there is no provision guaranteeing their payment, even subject to the availability of funds. Nor is their language setting the amount of the fund at the amount needed to cover the costs of a well-run PHA not covered by rents. Instead, that concept is merely listed as one of the factors HUD may consider in setting the formula to divide the money in the fund up among the PHAs.
The bill should authorize sufficient appropriations to cover the full operating subsidy needs and should require contracts guaranteeing their payment, if funds are available.
Demolishing, selling or closing public housing projects can be devastating to the current residents and people on the waiting list. Current residents are displaced from their homes. Often they are forced into other, substandard public housing. Many times that public housing is not in the same neighborhood where they have established family ties, friends and community connections. Children are torn out of their schools mid-semester. People in need of medical care are separated from their regular doctors.
Although certificates and vouchers are touted as alternatives that give public housing residents more choices of better housing, in many markets that turns out not to be the case. For example, the majority of the public housing tenants displaced by demolitions in San Francisco during the past two years have been unable to use their certificates in San Francisco. They have been forced out of the city or into other public housing.
Without one-for-one replacement, the supply of housing available to people on the waiting list diminishes, by definition. Units that become vacant go to people being displaced from the projects being demolished. Often they are held vacant for long periods to serve as relocation resources when the demolitions begin. People on the waiting lists wait forever, because there is less housing to go around and people being displaced get it all.
In many localities, the impetus for demolition, vouchering out or a sale, is not the condition of the units, but the desire to use the site for something other than public housing. Examples are legion. Expansion of a medical school or other academic institution, commercial development near a new rapid transit stop, gradual expansion of the downtown into the nearby low-income neighborhood, gentrification of a once declining neighborhood, building of parking lots for convention centers. The list could go on and on. The more the restrictions on demolition and sales are loosened, the greater the number of cases in which desperately needed, viable public housing will be lost and poor people displaced.
Grounds for Sale. S. 642 does not have sufficient safeguards to prevent these problems from arising. The changes in Section 115 regarding ordinary demolitions and sales are too extreme. One of the grounds for sale of a project is loosened too broadly. Under current law, if a sale is justified on the grounds that it will allow the provision of other housing that can be more efficiently as low-income housing projects, the alternative projects must provide as many units as the project being sold. That latter requirement, which is essential to make the sale justifiable, is deleted by this bill. Sale of a hundred and fifty unit project in order to put a more efficient fifty unit project on the market, which the bill would allow, would leave one hundred families without housing.
Tenant and Local Government Consultation. The PHA should have to develop the demolition or disposition plan in close consultation with the affected tenants and tenant councils. That close consultation should include always providing the tenants with all the relevant information and with funding needed to secure necessary technical assistance. The PHA should be required to sit down and negotiate with the tenants in good faith about the future of their homes. Current law at least requires the PHA to develop the demolition or sale application in consultation with the affected tenants and tenant councils. The bill would repeal that provision of current law. It should not.
Local government officials should have some oversight responsibilities when demolition or sale of a public housing development is being contemplated. They should at least have to certify that the demolition or sale is consistent with the locality's consolidated plan. The bill would require the local government to certify that the over-all public housing agency plan is consistent with the consolidated plan. That, however, is not specific enough to constitute effective oversight. The local government should have to approve the demolition or sale application, as current law requires. See Section 18(b)(1).
Relocation. On relocation protections, the bill is extremely deficient. It would repeal the basic protection that displaced families must be relocated to decent, safe and affordable housing that is to the maximum extent practicable housing of their choice. Current law guarantees tenants displaced by the demolition or sale of public housing that assurance. Section 18(b)(2). The bill would repeal that provision and only include language requiring the PHA to pay the tenant's relocation expenses and ensure that their rents after relocation do not exceed their rents under the Housing Act. New Section 18(a)(4). There is no assurance that the tenants will not be relocated into substandard housing.
The second defect in the relocation provisions of the bill is that it would make the Uniform Relocation Act (URA) inapplicable to tenants displaced from public housing. The Uniform Relocation Act was passed in 1970 as a result of all the lessons learned the hard way from the destruction of neighborhoods by urban renewal and highway building in the 1950's and 60's. It was designed to ensure that everyone displaced by federally funded activities would be treated equally and that the hardships of forced relocation would be mitigated as much as possible. We are embarking upon implementation of a plan for demolition of at least 100,000 units of public housing and the conversion of others to vouchers. Tenants in those units should not be treated as second class citizens as far as relocation is concerned. They deserve and need the protections of the Uniform Relocation Act as much, if not more than others displaced by federal activities. The bill should be amended to delete the provision that would deny them their URA protections.
HUD's Role. HUD's oversight of these decisions to demolish or sell projects, which the federal government paid for, is reduced to checking whether the PHA made the proper certifications and disapproving an application if the certification is clearly inconsistent with any information HUD has. HUD would be given only 60 days to make that determination. No longer will HUD be responsible for determining itself that the grounds for demolition or sale exist, that the displaced tenants will have a place to move to, and that the PHA has followed the required procedures.
Complaints about too much HUD micro-management of the day-to-day operation of public housing do not justify eliminating HUD's role when the decision is whether to remove units from the $90 billion, federally-paid for inventory of public housing. Such basic, non-routine decisions are the ones where HUD should be involved.
1-for-1 Replacement. The 1-for-1 replacement requirement would be eliminated in all cases. The policy argument made for eliminating the 1-for-1 requirement is that it has created a bottle-neck that has prevented the demolition of severely deteriorated projects that have become uninhabitable. The remedy should be tailored to the problem. One-for-one replacement should not be eliminated in sale situations, where needed housing is being take off the market for non-housing reasons. Only in cases where demolition is justified because the housing has become uninhabitable and cannot be rehabilitated should the one-for-one replacement requirement be eliminated.
PHA Compliance. Current law provides explicitly that a PHA must not take any action to demolish or sell a project without complying with the statutory limits and securing HUD's approval. Section 18(d). An exception was added in 1995, for cases where a PHA consolidates occupancy in a building or project to improve tenants' living conditions or services. The bill would repeal that compliance requirement entirely, but it should not. Without it, tenants would not be able to enforce the PHA's duties set out in the statute. See Edwards v. District of Columbia, 821 F.2d 651 (D.C. Cir. 1987).
Conversion. Section 119 adds a new Section 31 which mandates conversion of certain projects to rental housing assistance. It is modeled on the mandatory conversion provision in the FY 1996 Appropriations Act and contains certain important protections for affected tenants. First, it requires the PHA to consult with tenants when identifying projects for conversion. Second, it guarantees tenants a right to notice of the conversion, a right to relocation to public or assisted housing or with tenant-based assistance and relocation counseling. It does not, however, ensure the tenants relocation to decent, safe and affordable housing that is to the maximum extent practicable housing of their choice. Current law guarantees tenants displaced by the demolition or sale of public housing that assurance. Section 18(b)(2). The same should be true for people displaced by conversions, especially since the rational for the displacement is that vouchers are cheaper. Unlike that provision, the new Section 31 would apply to all public housing projects, not just those with 300 or more units. Mandatory conversion should only be applied to the larger projects.
Section 115 of the bill would also create a new voluntary conversion option for PHAs. It has certain requirements that are missing from the section on mandatory conversion. They include requirements that the ability of the private market to absorb the additional voucher-holders be assessed, that the impact of the conversion on the neighborhood be considered and that the conversion not be implemented unless it would principally benefit the tenants, the PHA and the community. Those principles should be added to the mandatory conversion section, or the two should be merged into a single, voluntary conversion provision.
There are currently two provisions in the Housing Act that are designed to ensure that public housing in which the federal government has invested significant funds be used as housing for low income people as long as it can be so used, unless HUD grants permission for demolition, sale or other use. One is the provision in Section 9 that now prevents a PHA from selling public housing projects without HUD approval for 10 years after any year in which the PHA has received operating subsidies for the project. Section 9(a)(1)(A). That provision is necessary to prevent PHAs from selling projects after the original 40 year ACC's have expired. The second provision is the current Section 14(b)(2) which provides that PHA's obligations regarding modernization funds for a particular project must remain in effect for 20 years after the funds are accepted for the project.
The bill would repeal both of these sections when it repeals Sections 9 and 14. See Sections 109 and 112. There are no comparable provisions in the capital or operating fund sections obliging the PHA to continue to projects as public housing for either 20 years after they have been modernized or 10 years after they receive operating subsidies. There should be such provisions.
Mortgages. Use restrictions should also be protected in the new Section 32 that would allow PHA's to mortgage their projects or otherwise create security interests in them. See Section 120. When a lender is granted a security interest in a public housing project, that creates a risk that the project will be lost should the PHA or other owner default and the lender foreclose. The Congress should not be allowing PHA's to borrow against these properties for which the federal government has paid, without ensuring that the lender who acquires a project at foreclosure will have to continue to use the property for the purpose for which the federal government paid for it. Otherwise we will face the same problems regarding the loss of affordable units and the federal government's investment in them that we experienced with the Section 221(d)(3) and 236 programs in the 1970's. The Multifamily Mortgage Foreclosure Act of 1981 would provide a model for crafting a use restriction that would survive mortgage foreclosure. 12 U.S.C.A. 3706(b).
Mixed Finance Projects. A similar problem regarding the length of use restrictions will be created by the section on mixed-finance projects. See Section 118, adding the new Section 30. Subparagraph (b)(2)(A) of that section would merely require units in these mixed finance projects to be available for public housing applicants for 20 years. About 35 years ago, HUD's predecessor designed the Section 221(d)(3) BMIR program with comparable 20 year use restrictions. Seven years later HUD did the same with the Section 236 program. Twenty years elapsed and the chickens began coming home to roost. Section 221(d)(3) and Section 236 owners began to exercise their options to prepay their mortgages and take their buildings off the low-income market. In an attempt to prevent massive displacement and shrinkage of the affordable housing supply, Congress created the preservation program, which is now suffering a slow death because it is believed to be too expensive
It is important not to make that same mistake again with mixed-finance public housing projects. There is no need to grant private partners full ownership interests in these properties. They will contribute as long as they qualify for the tax credits and they can get a market rate return on whatever capital they contribute for their restricted ownership interests. The use restrictions placed on the properties should last as long as the properties can be effectively used as housing for low income people. When that time comes, any proceeds from the sale or other use of the properties should be required to be reinvested in housing for public housing applicants.
The language regarding the number of units in the mixed-finance projects that must be public housing units also appears inadequate to ensure that Congress will be getting its money's worth. See the New Section 30(b)(2)(B). The bill would require the percentage of public housing units in the project to be proportional to the percentage of the total financial commitment to the project provided by the PHA. In a $10,000,000 project, if the PHA contributes $1,000,000 from its capital fund to the project and the private partner brings in $9,000,000 most of which is borrowed money, secured by a mortgage against the project, the statute might be interpreted to require only 10 percent of the units to be public housing. That would hardly be fair, given that the PHA is providing almost all of the equity and the security for the lender. A more careful formulation of the number of units test is required.
The section regarding rents in mixed-finance projects that are assisted under the Tax Credit program will also cause severe waste of federal public housing funds. See the New Section 30(c)(2). That language would allow PHAS to charge tenants in such projects at any levels they set, as long as they do not exceed the maximum rents allowed in the tax credit program. Unlike the normal public housing rents, tax credit rents are not adjusted in accordance with actual tenants incomes. Instead, the rents cannot exceed 30 percent of either 50 or 60 percent of the area median income, whichever is elected by the landlord. IRC Section 42(g)(2). When 50 percent of the area median incomes is above $24,000 per year, as it is in parts of Florida, Maryland, New York and Massachusetts, among other states, the PHAs could charge rents of up to $600 a month, regardless of the tenant's income. Not many minimum wage workers or welfare recipients would be living in those public housing units.
The bill, at Section 107(f)(1), would repeal the current statutory requirement that public housing tenants not be evicted without 14 days notice, in nonpayment of rent cases, reasonable notice in health and safety threat cases and 30 days notice in all other cases. In its place, the statute would require whatever notice is required by state law.
That change will create an extreme hardship for poor public housing tenants in many states. In many states, including California, state law merely requires the landlord to give the tenant three days notice before filing an eviction action, and in some states, such as Nevada, no advance notice is required at all. The federal minimums of 30 days, 14 days and a reasonable time were established to ensure all public housing tenants, who by definition are poor, a modicum of fairness, before having to move or prepare to defend themselves against an eviction action. They should not be deleted from the statute now.
The bill, at Section 110, would require each adult donate 8 hours of work each month to the community where he or she lives. The PHA would be granted discretion to exempt people who are elderly, who have disabilities and cannot comply, who are working, attending school or meeting welfare work requirements or who are single parents with children 6 or younger.
This provision unnecessarily duplicates the requirements that already will be imposed on any non-working tenants who are receiving welfare. In doing so, it may even frustrate achievement of the goals of the changes in the welfare program, if it ends up imposing conflicting requirements on the same people. Thus it should be eliminated from the bill.
If it is not eliminated, the provisions regarding the exemptions should be made mandatory, not discretionary with the PHA. If a person with disabilities, for example, is determined to be unable to comply, it makes no sense for the statute to grant the PHA discretion to require the person to comply anyway. If someone meets the standards for exemption there exemption should be automatic. It should not be contingent upon the whims of a PHA official.
The provision should also be transformed into one that emphasizes tenants voluntary participation in their communities, instead of mandating involvement. Experience shows that community involvement is more likely to succeed when the community members become involved by their own choice. Forcing tenants to tenant organization meetings, for example, is not likely to strengthen the tenant organization or build the community.
The bill would complete the merger of the certificate and voucher programs which HUD began to do administratively four years ago. There are two details regarding the merger upon which improvements can be made. First, under the new Section 8(o)(3), tenants are prohibited from renting a unit if the family's share of the rent would be more than 40 percent of their adjusted monthly income. That section is apparently intended to prevent the family from paying more rent than it can afford. However, its effect will just be to narrow the number of units that poor tenants can rent under the program. In cases where to only standard units available rent at levels that would require the tenant's share to exceed the 40 percent limit, the family will have to turn the voucher back in. And then it will be out on the unsubsidized market paying even more of its income for rent. The 40 percent cap should be eliminated.
Second, under new Section 8(o)(7), landlords will be able to evict tenants at the end of the lease without cause and PHAs will be able to approve leases of less than one year. If a PHA approves a month to month lease, which is the most likely alternative to a one year lease, the tenant will be left with no protection against arbitrary eviction. At the end of the month, the landlord will be free not to renew the lease without cause. At the most the landlord wi1l have to give a thirty day notice opting not to renew the lease, but he will not have to state the reason. If that provision is retained, we wfll have cured to "so called" problem of the endless lease, by authorizing, in effect, a leaseless tenancy. Exceptions to the one year lease requirement should not be authorized by the bill.
We hope these suggestions will be helpful during the Committee's further
consideration of this bill.
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